Where you go to buy or sell a business…..

1. “I can buy a business with no money down” – It’s not 2007 anymore and the days of financing 100% of the purchase price are over.  In today’s economy, you will be required to inject equity into the transaction equal to 20% – 25% of the purchase price.  If you are not capable of making this investment in the business you plan to purchase, it’s time to start looking at a smaller (or cheaper) business.

2.  “All the seller cares about is money” – While it’s true that money talks and all else walks, it is rarely the only factor in a seller’s mind when it comes to selling their business.  Business sellers have often spent their lifetime growing their business and they’re not about to simply turn it over to the highest bidder.  Their employees have become family and their business has become their identity.  If you wish to purchase the seller’s identity, you need to convince them that you’ll continue the legacy they’ve built long after they’re gone.

3.  “There is something wrong with this business or else it wouldn’t be for sale” – This could be the biggest misconception of them all.  Very rarely does a business owner go into business with the intention of selling it.  But, as time goes on, an owner will begin to realize that they can’t take the business with them once they’re gone.  They need to sell the business if they want to enjoy retirement.  Most business owners are not selling the business because there’s something wrong with it.  Most just want to spend some time with family and friends before it’s too late.

4.  “I have experience with a large corporation.  So, I am well groomed to own and operate my own business” – Don’t kid yourself.  Have you ever heard the saying, “you don’t know what you don’t know?”  This has never been more true than when it comes to transitioning from a corporate job to small business.  In the corporate world you’ve been surrounded by lots of systems and support staff allowing you to concentrate on a particular area of the business.  As a small business owner you will be everything from the chief executive officer to the chef window washer.  If you’re unable to swallow your pride and embrace a “whatever it takes” attitude, small business ownership may not be for you.

5.  “The seller will finance the majority of the purchase price” – the seller may be willing to finance a small portion of the purchase price (10% – 20%) but rarely will their generosity exceed this threshold.  If you need the seller to take the majority of the financial risk in order for you to complete a transaction, maybe you’re not the best buyer for their business.  Think about it this way, what if you retired from your current job and your replacement was a new college graduate with no work experience.  The replacement had no mentor, no coach and no boss.  Would you decide to take a portion of their salary each year for retirement instead of a guaranteed retirement package?  Remember, if they fail you get nothing.  If you won’t do it, why should the seller?

On June 10, 2011 River’s Edge Alliance Group, LLC completed the sale of Mincin Insulation Service, Inc. to Tedesco Partners, LP.

Mincin Insulation Service, Inc. is an insulation service provider located in Pittsburgh, Pennsylvania.

Founded in 1975, Mincin Insulation Service, Inc. is as a sub-contractor for Western Pennsylvania utility companies as part of their low-income weatherization program.  In addition, Mincin Insulation provides insulation services to private residential customers in and around the Pittsburgh area.

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River’s Edge Alliance Group, LLC is a business brokerage firm with offices in Pittsburgh, PA and Cleveland, OH.  River’s Edge Alliance Group served as the exclusive sell-side advisor on this transaction.

River’s Edge Alliance Group is pleased to announce that Co-Founder and Director, Todd Torquato, has been invited to attend the Small Business Administration Regulatory Fairness Forum on May 10^th, 2011 in Pittsburgh, Pennsylvania.

Todd has been asked to share his thoughts and expertise with National Ombudsman and Assistant Administrator for Regulatory Enforcement Fairness Esther H. Vassar regarding how to create a more fair and cooperative regulatory relationship between government agencies and small businesses.

To help us make your voice heard, please contact Todd with your input on how government policy can be adapted to create more fair regulations in the small business community.

Todd Torquato

Office:    (412) 631-8701

Direct:    (610) 613-8784

Email:     tatorquato@RiversEdgeAlliance.com

Internet: www.RiversEdgeAlliance.com

For more information on the Office of the National Ombudsman, please visit the Office of the National Ombudsman.

On April 28, 2011, River’s Edge Alliance Group Co-Founder and Managing Director, Scott Mashuda participated in the White House sponsored event, “Startup America:  Reducing Barriers Roundtable” in Pittsburgh, PA.

“Startup America” is a White House initiative to celebrate, inspire, and accelerate high-growth entrepreneurship throughout the nation.  The coordinated public/private effort brought together an alliance of the country’s most innovative entrepreneurs, corporations, universities, foundations, and other local leaders to work with a wide range of federal agencies to dramatically increase the prevalence and success of America’s entrepreneurs.

Mr. Mashuda introduced the following 3 small business barriers to the discussion:

• Access to Capital
• Taxes
• Reduction in Paperwork

As part of the collaborative problem solving effort, participants were encouraged to bring solutions for reducing these barriers, not just the barriers themselves.

Mr. Mashuda shared the following potential solutions:

• Make principal repayments on small business debt tax deductible.  Many entrepreneurs and small business owners are forced to leverage their companies to make it through start-up or recessionary times.  These owners, specifically LLC’s are taxed on the company’s earnings with no consideration to the fact that these earnings may not have been distributed to ownership, but rather used to pay down debt.  Taxing pre-debt earnings puts the entrepreneur / owner in the difficult position of needing to pay taxes on money they did not actually receive.  Taxing entrepreneurs strictly on their distributions rather than the company’s earnings would eliminate this hindrance to growth.

• Make credit card interest for small business owners and entrepreneurs tax deductible.  Since a track record is required to obtain third party financing, many entrepreneurs are forced to bootstrap their startups with credit cards.  Making this interest tax deducible, the same as third party loan interest would ease the tax burden on entrepreneurs during start-up.

• Make interest income for investors in small businesses tax deductible.  This would encourage individuals to lend money to small businesses that do not have access to bank debt.  The idea would be to incentivize family, friends and other non-qualified angels to invest in entrepreneurial enterprises.

• Make dividends to minority owners in small businesses tax exempt (or taxed at a lesser rate) in an effort to encourage high net worth (non-qualified angels) to invest in startups.

• There needs to be recognition and incentive for SBA lenders to lend based on cash flow.  Cash flow repays loans not collateral.  The current focus by the SBA on collateral in order to contribute their guarantee inhibits lending to service based and technology businesses with minimal fixed assets.

• Increase the rate at which capital flows by enacting a reduction in paperwork act similar to the Reagan Paperwork Reduction Act.

Mr. Mashuda would like to thank the Administration for providing the forum by which entrepreneurs can introduce barriers to growth and share potential solutions.  We are hopeful that our voices will be heard in Washington and changes are implemented.

To discuss these ideas in further detail, please contact Scott Mashuda at (412) 894-3244 or by e-mail at smashuda@RiversEdgeAlliance.com.

River’s Edge Alliance Group is proud to announce that James Reik, a transaction advisor in the Pittsburgh, Pennsylvania office will be volunteering his time to assist with disaster relief and clean-up efforts in the southern United States following the series of recent deadly storms across six states.  James will be traveling the weekend of May 6^th, 2011 to areas severely impacted by the storms as part of a humanitarian relief effort coordinated by the Church of Jesus Christ of Latter-day Saints.

At last report, the storms have taken the lives of at least 345 people and injured hundreds more.  The loss of life is the worst from tornadoes in the United States in nearly 40 years.

The Church of Jesus Christ of Latter-day Saints provides relief and development projects for humanitarian purposes in countries all over the world.  Projects operate without regard to the nationality or religion of the recipients. Within hours of a disaster, the Church works with local government officials to determine what supplies and food are needed.  Materials are then immediately sent to the area as local and regional Church leaders work to mobilize an effective response with members.

For more information on this effort:

www.lds.org

http://newsroom.lds.org/topic/humanitarian-services